The erroneous differentiation of tendon-derived stem cells (TDSCs) into adipocytes, chondrocytes, and osteoblasts is believed to play an important role in the development of tendinopathy. However, the regulatory mechanisms of TDSC differentiation remain unclear. The aim of this study is to investigate the contribution and mechanism of the tendon microstructural disruption to the differentiation of TDSCs. Bovine Achilles tendons were sliced. The tendon slices were stretched with different tensile strains to mimic the tendon structure alteration at various scales. The TDSCs were cultured on the tendon slices. The differentiation of TDSCs and endoplasmic reticulum (ER) stress in the TDSCs were investigated with quantitative reverse transcription polymerase chain reaction, immunostaining and western blot. The effect of ER stress inhibition on chondrogenic differentiation of the TDSCs was further investigated. The structural alteration did not affect the viability of TDSCs. However, the structural alteration of tendon slices with 6.4% strain promoted TDSCs to express the chondrogenic genes. ER stress-related markers, ATF-4 and PERK, were also upregulated. With the inhibition of ER stress, the expression of ATF-4 and the chondrogenic gene SOX9 of TDSCs were inhibited. The study indicated that tendon microdamage could induce the chondrogenic differentiation of TDSCs through triggering ER stress to activate ATF-4 and SOX9 subsequently.